Becoming a venture capitalist is a dream of many people. Ventures capitalists are paid to meet with entrepreneurial individuals and to learn as much as possible about new markets. Venture capitalist gets to follow along founders’ entrepreneurial journeys, audacious and determined than they are, without a lot of risk of having all their assets and professional reputation tied to one outcome.
If you want to start a small VC fund, talk to individuals who have done it before. It will be helpful if you will understand how and what they did. You should be ready to commit to that for a long time.
If you put more effort, time and get a bit of luck, you might generate meaningful returns from VC business. However, to succeed, you need to model out all possible scenarios and make some key decisions such as a number of deals you want to make, the size of a check you want to make, the amount you will reserve for follow-on investment and the number of follow-ons you will be making.
Finally, define your compensation and find a solid team. If you are doing VC business as part-time, it is advisable not take any management fee out of the fund. Choosing partners for a fund is more important than choosing a co-founder.